Car dealers and brokers operate in a different space from private buyers when it comes to road tax. Trade plates, demo vehicles, and auction purchases each carry their own tax rules that commercial operators must navigate to stay compliant.
Trade Plates for Car Dealers
Motor traders — dealers, mechanics, and valeters — can apply for trade licences and trade plates. Trade plates allow a vehicle to be driven on public roads without standard road tax or registration. This is essential for moving vehicles between premises, to MOT stations, to auctions, and for test drives with potential buyers. Trade plates are registered to the business and must be displayed on the front and rear of the vehicle when in use.
Trade Plate Fees and Eligibility
Trade plates cost around £ £175 for a full trade licence with two plates, with additional plates available at extra cost. The trade licence is annual and must be renewed. To qualify, you must be a motor trader, vehicle repairer, or vehicle recycler registered with DVLA. The plates can only be used on vehicles that are not currently taxed and registered in someone else's name — they are not a substitute for proper road tax on registered vehicles.
Demo Vehicles and Road Tax
A dealer's demonstrator vehicle — a car used for test drives with potential buyers — must be properly taxed and registered. The dealer can use trade plates to deliver the vehicle to a customer or for test drives, but once registered to a customer, standard road tax applies. Demo vehicles registered in the dealer's name should be taxed at the standard rate unless the dealer qualifies for a commercial exemption.
Car Auction Tax Rules
Vehicles purchased at auction are typically sold without road tax. The new owner must tax the vehicle immediately before driving it on a public road. Even if the auction house offers to help with paperwork, the legal responsibility for taxing the vehicle falls on the new keeper. Vehicles at auction must either have valid tax or be moved on trade plates — driving an untaxed vehicle from an auction to the road is an offence.
Broker Liability for Road Tax
Vehicle brokers who arrange purchases on behalf of clients have a responsibility to ensure road tax is properly explained. Brokers should advise clients to tax the vehicle immediately upon taking ownership. Failure to do so — even if the broker handled the sale — can result in fines and penalties for the keeper. Brokers who arrange lease vehicles should ensure clients understand that road tax is a separate cost from the monthly lease payment.